How We Create the Wealth of Nations
Chapter 7: Wide Frames and the Luddites
A huge amount has been written about the creative power of business innovation. Rather less, however, has been written about its destructive power. This is surprising since Schumpeter made it so clear that innovation is a perennial gale of creative destruction: the destruction goes hand in hand with the creation. It is not my purpose here to cast any doubt on the creative power of business innovation. Nor is it my purpose to add any new evidence of this. It seems to me that it is well understood, well documented, and needs no further elaboration.1 And, in any case, I have nothing of much novelty to add here on the subject. Rather, my purpose in this part of the book is to study the destructive side of the ‘perennial gale’. I don’t do this because I believe it is larger than the creative side – in general, I believe it is not. But I do this because it seems to me that relatively few of those who research the economics of innovation give any attention to its destructive side. We need to give proper attention to the destructive side of innovation, for two reasons. First, we need to know more about it and the form it takes. Second, it will help us to investigate the hypothesis I advanced in Chapter 3 about the essential difference between business innovation and common innovation. Is it true that the former is a ‘gale’ where great creative power is accompanied by destructive power? And is it also true that the latter is a ‘gentle and benign breeze’ where creative power is more modest, but destructive side-effects are less important? In my original plan for this book, Part II was to contain a larger number of longer case studies. But when these were finished, Part II was starting to overwhelm the rest of the book – and, indeed, to obscure the main message of the book. Accordingly, I have reduced the number of cases and shortened them.
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